Bechtel Group Inc.
This company has Areas of Concern regarding Human Rights and Business Ethics.
Bechtel Group Inc.
Whether the job is raising an entire city or razing a nuclear power plant, you can bet the Bechtel Group will be there to bid on the business. The firm is the US's #1 contractor (ahead of Fluor Corp.). The engineering, construction, and project management firm operates worldwide and has participated in such notable projects as the construction of Hoover Dam and the cleanup of the Chernobyl nuclear plant. Subsidiary Bechtel Enterprises invests in infrastructure projects and arranges financing for its clients. The group is in its fourth generation of leadership by the Bechtel family, with chairman and CEO Riley Bechtel at the helm. The billionaire Bechtel family owns a controlling stake in the firm.
|This company is part of the Knowmore Feature Article titled "U.S. Contractors in Iraq and Afghanistan".|
Warren A. Bechtel performed his first construction work in 1898, grading railroad beds with a mule-drawn scraper in Oklahoma Territory. By 1906 W.A. Bechtel was contracting on railroad jobs up and down the Pacific coast of the United States. Soon the W.A. Bechtel Co. was also building roads, tunnels, bridges, and dams. Customers responded to W.A.’s work ethic, and the business prospered. W.A. himself put it succinctly: "When you can’t trust a man’s word you can’t trust his signature." To get the work done efficiently, W.A. learned to rely on the most modern methods available, a Bechtel tradition that continues to this day. Early on, W.A. mastered the steam shovel, and he and his sons pioneered such applications as dump trucks and tractors right on the job site.
In 1931 W.A. helped put together one of the industry’s first large-scale joint ventures, the Six Companies consortium that built Hoover Dam. Son Stephen took over as president when W.A. passed away in 1933. Assuming his duties in the midst of the Hoover Dam project, Steve’s management efforts helped workers finish the job two years ahead of schedule. An associate once remarked that Steve Bechtel could "conjure up a vision of the future at an instant’s notice." Steve himself is reported to have said, without boasting, "We can build anything, anytime, anywhere." Indeed, he built Bechtel into a global concern, landing projects on all seven continents and expanding the portfolio of work to include areas such as pipelines, petroleum and chemicals, mining and metals, and power. Steve Bechtel pioneered the concept of the turnkey project, and took on monumental tasks such as the Trans-Arabian pipeline, as well as innovative efforts like the Dresden nuclear power plant in Illinois, the industry’s first privately financed facility.
Stephen Bechtel, Jr. became president in 1960, upon his father’s retirement from active service. Steve Jr. ushered in the era of the "megaproject." Bechtel was at the forefront of the fields that defined the period: nuclear power, liquefied natural gas, transportation, space and defense, and environmental protection and cleanup. Taking advantage of the latest management techniques and engineering technology, Steve Jr. led the company in designing and building extraordinarily complex projects worldwide, including numerous refineries, offshore platforms, transit systems, mining developments, and nuclear and fossil-fired plants. Among many notable landmarks were the Jubail industrial complex in Saudi Arabia, the St. James Bay hydroelectric plant in Quebec, and northern California’s BART rapid transit system.
Today, Riley Bechtel continues the foundation of family leadership, as the fourth generation to head the company during the past century. Under Riley’s direction, Bechtel has organized to respond to customers with creative technology and local expertise, providing flexible solutions and outstanding value no matter what the industry or the region.
 Political Relations
Bechtel's Political Clout Helps Iraq Bid
Sat Apr 19,11:29 AM ET
By MICHAEL LIEDTKE, AP Business Writer
SAN FRANCISCO - It's not just a history of building landmarks like the Hoover Dam that helped Bechtel Corp. win the first major Iraq reconstruction contract. The company is as well-connected as Washington insiders come.
Bechtel not only has close ties with elder Republican statesmen, its executives also enjoy direct links to the Bush administration, which has critics crying cronyism.
Many worry that Bechtel's inside-the-Beltway cachet was as important to its successful bid as any technical advantage over competitors.
The initial $34.6 million contract announced Thursday by the U.S. Agency for International Development could spiral far beyond its projected $680 million price tag.
And Bechtel is widely perceived as the front-runner for future business as the United States spends up to $100 billion in what's seen as the biggest reconstruction project since World War II's aftermath.
The San Francisco-based company has grown over decades from a family business into a privately held international engineering powerhouse.
Other companies invited to submit bids were Pasadena-based Parsons Corp.; Fluor Corp.; Louis Berger Group Inc.; and Washington Group International Inc. A subsidiary of Halliburton Co., which was formerly run by Vice President Dick Cheney, was invited to bid but removed itself amid favoritism charges.
At least two current Bechtel executives have ties to the Bush administration.
A senior vice president, Jack Sheehan, sits on the Defense Policy Board formed to advise Defense Secretary Donald Rumsfeld, who himself once lobbied for a Bechtel project. Sheehan, a retired Marine Corps general, manages Bechtel's petroleum and chemical operations.
And President Bush appointed Bechtel's chairman, Riley Bechtel, in February to the Export Council, which advises the president on international trade matters.
Bechtel says its politically connected executives are a small part of a 47,000-employee team working on 900 projects in nearly 60 countries.
"It's our business to have knowledgeable people so we can have the breadth and depth of talent to tackle the things that most other people in the world can't," said Bechtel spokesman Jeff Berger.
Bechtel's accomplishments range from the Depression-era Hoover Dam to the transformation of a former Saudi Arabian fishing village into Jubail, an industrial city expected to house 370,000 residents.
It's that kind of track record that made Bechtel a natural candidate for the reconstruction of Iraq, federal officials say.
The government limited the field to an exclusive group for security reasons, as well as a desire to start the work quickly, USAID spokesman Luke Zahner said. "The reality is that there are only a few companies that can handle a contract of this size."
Bechtel's critics don't doubt the company is up to the job. Instead, they say that by limiting the bidding to Bechtel and five other U.S. companies, the federal government might not have gotten the best free-market deal.
"We are concerned that the government seems to be handpicking their buddies for these contracts," said Seth Morris, research associate for the nonpartisan Washington-based Project on Government Oversight.
In recent weeks, protesters have gathered outside Bechtel's headquarters for vitriolic rallies.
Riley Bechtel, 51, is the great-grandson of company founder Warren Bechtel and has been chief executive for 13 years. He has emerged as one of the world's richest people with an estimated fortune of $3.2 billion, according to Forbes magazine.
The company has backed its personal contacts within Washington with sizable campaign contributions. Bechtel gave $1.3 million to political candidates from 1999 through 2002, according to the Center for Responsive Politics.
That's a lot less than other influential businesses. The donations look like small change compared to the money Bechtel earns from the government.
In the fiscal year ended in September 2002, the Department of Defense paid Bechtel $1.03 billion, making it the 17th largest military contractor in the country.
Bechtel's revenue from all contracts totaled $11.6 billion in 2002, a 13 percent decline from $13.4 billion in the previous year. The company signed new contracts worth $12.7 billion, a 37 percent increase from $9.3 billion in 2001.
The Iraq contract is just the latest example of Bechtel winning a big government job from a friendly administration.
After serving as treasury secretary in the Nixon administration, George Shultz was Bechtel's president for seven years before he left in 1981 to become secretary of state in the Reagan administration.
And Casper Weinberger was its general counsel and served on the company's board from 1975-81 before becoming secretary of defense under Reagan.
While Shultz was America's top diplomat, the U.S. government tried unsuccessfully to persuade Saddam Hussein to let Bechtel build a pipeline to carry Iraqi crude oil through Jordan to the Red Sea port of Aqaba.
In 1983, Rumsfeld, while working as a special U.S. envoy in the Middle East, traveled to Baghdad to discuss the pipeline with Saddam and Iraq's Deputy Prime Minister Tariq Aziz, according to memos in the National Archives.
Iraq nixed the pipeline idea in 1986. Shultz has since returned to Bechtel's board of directors.
Bechtel exemplifies "the revolving door between government and business that Washington has helped perpetuate for years," said Jim Vallette, a research director at the Institute for Policy Studies, a nonpartisan Washington-based think tank. "We should have a separation between the state and corporations. Instead, they're acting more like partners."
- Not only has Bechtel won the bids for contracts in Iraq, they are also assigned to many projects inside the U.S. including the one below.
Bechtel's project to clean up the biggest nuclear waste site in America is now in limbo. Who's to blame?
Underneath the tumbleweeds in the desert of southeastern Washington lies the most dangerous waste dump in America. Here, at the Hanford Reservation, the U.S. government produced 74 tons of plutonium for atomic warheads during the Cold War, leaving behind 53 million gallons of plutonium-laden sludge in 177 underground tanks. Leaks in a third of those tanks have leached a million gallons of toxic goo into the earth. The water table is 300 feet down; the Columbia River flows 8 miles away. For good reason, the 150,000 people downstream are worried.
Uncle Sam has been trying to clean up the site for 16 years. After false starts--and a quadrupling of the price tag to a possible $10 billion--the skeleton of the largest nuclear waste treatment plant in the world finally went up. The plan is to transform the sludge into glass blocks, where the trapped isotopes would decay harmlessly over 10,000 years. But in late June, after a detailed inspection by the Army Corps of Engineers, the Department of Energy shut down the project. Just who is at fault for the engineering screwups is a matter of dispute. The House Subcommittee on Energy & Water Development has called for a complete audit, indicating that it believes the project could cost an additional $4 billion and another four years.
In charge of the plant is Bechtel National, a unit of the $17 billion (sales) construction giant. Three main buildings will contain 250,000 cubic yards of concrete, 30,000 tons of steel and 1,600 miles of cable. Bechtel National's Hanford project director, James Henschel, predicts it will be so robust that "this will be the last building standing on earth."
If it ever gets finished. Now that it's one-third built comes the revelation that the Energy Department and Bechtel grossly underestimated how strong the plant must be to withstand severe earthquakes. The project had slowed even before new Energy Secretary Samuel Bodman called a halt to construction on the core of the plant. Bechtel has laid off 1,000 workers.
If those workers are unsettled by the shaky state of this project, Bechtel is not. This is a cost-plus-incentive-fee deal. The construction firm puts up no capital but is guaranteed at least something and could get as much as $425 million in gross profit. "They need only show up with two hands and a brain," says an Energy Department manager. Contracts like this (common in defense procurement) reward speed, cost containment and quality of work. In the most recent contract Bechtel gets up to $114 million in fees for hitting milestones; another $110 million depends on the quality of the glass logs. (That work relies on melter technology from Duratek, a waste management outfit.) And the big one: For every dollar under the current $5.6 billion projected total cost, Bechtel keeps 50 cents, up to $200 million. These numbers will have to be renegotiated now that new seismic work is going to change the design.
Such are the vicissitudes of big, messy public projects. This one started in 1998, when Uncle Sam hired British Nuclear Fuels to build a vitrification plant for $2.3 billion. When the U.S. insisted that BNFL finance construction itself, cost estimates climbed to $15.2 billion--which triggered congressional hearings. After revelations of problems at a nuclear site in Britain, the Energy Department fired BNFL in 2000.
Bechtel was called in. The San Francisco contractor entered the megaproject era in 1931, part of a consortium to build the Hoover Dam. Then the world's biggest engineering marvel, the dam came in at $165 million, under budget and two years ahead of schedule. Safety regulations would make repetition impossible today: 100 workers died building the dam. Bechtel has also had a taste of recent imbroglios. The lead contractor on Boston's Big Dig--a nightmare that dragged on for 20 years and ran $12 billion over the original estimate--Bechtel says it earned $70 million and may refund a few million for tunnel repairs.
By the time Bechtel got started on the vitrification plant in 2001, three years had been lost to delays. To keep to a 2028 deadline negotiated in 1989, the government put Bechtel on a fast-track schedule. That drew fire from the Defense Nuclear Facilities Safety Board, which suggested a slower pace and ordered additional seismic study.
Auditors from the Office of Inspector General, meanwhile, tagged Bechtel for lax engineering and safety standards. Among the violations: near-fatal mishaps and hiding on-the-job accidents; a contractor managing the sludge tanks was investigated for workers' exposure to deadly tank fumes. In January 2003 the Energy Department withheld $3 million in quarterly fees because of quality lapses. By mid-2004 geologists became so concerned about the ability of the plant to withstand a 9-plus magnitude earthquake (such a tremor hit the area in 1700) that government managers ordered a building slowdown in December. Two months later, in a report to Congress, the safety board chided Bechtel and the Department of Energy for their "reluctance to admit safety concerns, in part because the design and construction contract incentivizes minimization of costs and maintenance of schedule." The government fined Bechtel $300,000 for safety violations.
From there things spiraled downward. In February Bechtel and Energy announced the plant's seismic standards had to be boosted 38%. In June Bodman visited Hanford for 11 hours, peppering engineers with questions. He then called for an inquiry into the plant's problems.
Bechtel must work hard to please Bodman's Hanford minders. And yet to preserve its profits--or even increase them in the renegotiated contract--it will have to blame the Energy Department for any miscalculations. The government will, no doubt, point the finger at Bechtel.
Meantime, old sludge tanks continue to weaken and the costs mount. The glassmaking operation is only a piece of the Hanford cleanup anyway; all told, the project will cost at least $85 billion and last until 2050. What's a few more months or another billion or two?
 Iraq War
The Bechtel Corporation
by Mick Youther
October 3, 2003
A history of poor planning, mismanagement, cost over-runs, and environmental destruction lands Bechtel Corporation a sweetheart deal in Iraq -- and American taxpayers pick up the tab!
A few weeks ago, I watched an ABC Nightline interview with Andrew Natsios, head of the US Agency for International Development (USAID). The thing I remember most about that interview was how he kept repeating that the cost to the American people for rebuilding Iraq would be no more than $1.7 billion.
Now that President Bush is asking for another $87 billion to rebuild Iraq; I did a little investigating. It seems that during 2000-2001, Mr. Natsios was the director of Boston's "Big Dig" project, the biggest boondoggle in American history; and guess who the prime contractor was -- Bechtel Corporation, who was just awarded the largest reconstruction contract in Iraq by none other than Mr. Natsios' USAID.
Bechtel's bid was the lowest among the few companies that got an invitation to bid in the Bush Administration's secret bidding process, and Mr. Natsios seemed delighted that Bechtel got the contract because they are so good at what they do. After a couple of years at the Big Dig, I think he should know better.
Over its nearly 20-year history, the cost of [Boston's "Big Dig"] has ballooned from $2.5 billion to $15 billion. The state government is investigating whether Bechtel is responsible for mistakes that total more than $1 billion. --LA Times, 4/18/03
"These cost overruns affected every single community in Massachusetts, every single taxpayer. . . . The state was clearly outsmarted and outgunned by Bechtel."
-Massachusetts state senator Mark C. Montigny, 2/11/03
"The delay cost Bechtel nothing. In fact, as with all the other overruns, it only added to the company's profit. While taxpayers covered the $128 million in overruns, Bechtel took home an additional $3.7 million for its extra time."
-Boston Globe, 2/9/03
"It would appear that [Bechtel] has been paid nearly $2 billion to simply monitor these design contracts, process payments and pass documents through to the Turnpike Authority. For $2 billion, the Commonwealth expected [the company] to do more than shuffle paper."
-Massachusetts State Inspector General Gregory W. Sullivan
The Big Dig: Guaranteed profits with limited liability, little or no oversight of planning or management, where mistakes and delays mean increased profits. You won't find a better deal than that -unless you have some inside connections that can get you on the gravy train in Iraq.
"On April 17, Bechtel received one of the first and largest of the rebuilding contracts in Iraq. Worth $680 million over 18 months...The contract was granted in backroom deals without open and transparent bidding processes and the content remains hidden behind a veil of secrecy."
-CorpWatch, Global Exchange, Public Citizen, Collaborative Report, 6/5/03
"U.S. officials recently decided that Bechtel requires the additional $ 350 million 'to maintain momentum in high-priority infrastructure projects'... U.S. officials and Bechtel assessment teams now estimate Iraqi reconstruction will cost at least $16 billion and likely much more. L. Paul Bremer, the top U.S. official in Iraq, has said that the costs of rebuilding Iraq and revitalizing its economy could top $100 billion."
-Dow Jones Newswires, 08/28/03
"All of these costs will initially be paid by American taxpayers, who will also pay for the bombs used to destroy Iraqi infrastructure in the first place. The rest of the burden will fall on the Iraqi people, as the US loots the country's oil resources to pay off the huge corporate contracts."
-Joseph Kay, 4/29/03, World Socialist Web Site
"Bechtel and privatization go hand in hand. As people learned the hard way in Bolivia and around the world, when Bechtel comes to town, you can expect costs to soar and accountability and local control to evaporate."
-Juliette Beck, Public Citizen office
"Bechtel has demonstrated brazen moral corruption by first contributing to the development of Iraq's weapons, then pushing for a war against Iraq, and finally profiting from the tragedy and destruction wrought by that war."
-Andrea Buffa, Global Exchange
"...Bechtel board members and employees with advisory positions to the Bush Administration helped ensure that Bechtel would receive one of the most lucrative contracts for rebuilding what they had helped to destroy."
-CorpWatch, Global Exchange, Public Citizen, Collaborative Report, 6/5/03
"[The report, Bechtel: Profiting from Destruction] documents a track record by Bechtel of environmental destruction, disregard for human rights and financial mismanagement of projects that has affected communities all over the world and does not bode well for the people of Iraq."
Since CEOs now run our government, it should not surprise anyone that Operation Iraqi Freedom is managed just like any other Bechtel project, complete with poor planning, mismanagement, cost over-runs, and no oversight. Corporate profits are guaranteed, so the more they waste, the more money they make. No one loses except our troops, the Iraqi people and American taxpayers.
 History of Malpractice
Fatalities at Hoover Dam
Many people come to Hoover Dam and take our tour. Probably the two most asked questions are: 1) How many people died building the dam? and 2) How many of those are buried in the concrete? The second question is the easiest to answer -- none! There are no bodies buried in the concrete.
The dam was built in interlocking blocks, built on top of each other as they went. Each block was five feet high. The smallest blocks were about 25 by 25 feet, and the largest blocks were about 25 by 60 feet. Concrete was delivered to the blocks in buckets, eight cubic yards at a time. After each bucket was delivered five or six men would tromp around on the inside of the block, packing down the concrete and making sure there were no air holes. These men were called "Puddlers". Each time a bucket was emptied into the largest blocks the level of the concrete increased by two to three inches. How can you lose a body in two to three inches of concrete? Of course the smaller blocks did fill up faster. Each time a bucket was emptied into the smaller blocks the level was raised about six inches. Even with six inches the nose and the toes would have stuck out, and the puddlers would have seen them. There are no bodies buried in Hoover Dam. In fact we call that a Dam Rumor.
The first question is more difficult to answer. There are various numbers that can be used depending on who you include as having died on the project. One popular number is 112, but it requires some stretching to make it fit. With this number you get the story of the first and last men to die on the project. It goes something like this. On December 20, 1922, J.G. Tierney, a Bureau of Reclamation employee engaged in a geological survey from a barge in the Colorado River fell in the river and drowned. Thirteen years to the day, on December 20, 1935, Patrick W. Tierney, a Bureau or Reclamation employee and son of J.G. Tierney, fell from one of the intake towers. This version has a couple of problems. First, the dam was built from 1931 to 1935, so J.G. Tierney was not really involved in the "construction" of the dam. He was doing a geological survey to decide where the dam would be built, but he was not the first person doing the survey to die. On May 15, 1922, Harold Connelly, also fell off of a barge and drowned. So, why isn't he considered the first person to die on the project. Well, for one thing it would not make as good a story as the Tierney family. To get around this people point out that Connelly died while surveying a canyon upstream from the present site of the dam, while both Tierneys died in the canyon where the dam was eventually built.
Another common number is 96. There were 96 industrial fatalities during the construction of the dam. Industrial fatalities includes deaths from drowning, blasting, falling rocks or slides, falls from the canyon walls, struck by heavy equipment, truck accidents, etc. Industrial fatalities do not include deaths from the heat, pneumonia, heart trouble, etc.
This information comes from the Hoover Dam Project History, volumes 1 through 5, 1931 to 1935. The information is presented here in the same format as it was originally printed. There is a separate web page for each year, and an additional page called "Biographies". The biographies page presents information about how the men died. It is mostly taken from newspaper accounts of that time.
 Unethical Business Practices
Bechtel vs. Bolivia
The Bolivian Water Revolt
Read more information on this issue at: http://www.democracyctr.org/bechtel/
Bechtel vs. Bolivia
Riley Bechtel is the 51st most wealthy man in the U.S.* He heads one of the most powerful corporations in the world. He is also providing, to the press and public, deliberately false and misleading information about the suffering his company created for the people of Bolivia.
(* Source: Forbes Magazine)
For the poorest people in Cochabamba [water] rates went up little, barely 10 percent. - Gail Apps, spokeswoman for Riley Bechtel January 3, 2002 e-mail to the public and the media
In February 2000, just months after it took over control of the water system of Bolivia’s third largest city, Cochabamba, a Bechtel subsidiary hit water users with enormous price increases. These increases forced some of the poorest families in South America to literally choose between food or water. A popular uprising against the company, repressed violently by government troops, left one 17 year old boy dead and more than a hundred people wounded. In April 2000 Bechtel was finally forced to leave.
In November 2001 Bechtel decided to add to the suffering it had already caused by filing a legal demand for $25 million against the Bolivian people – compensation for its lost opportunity to make future profits. In response, The Democracy Center and more than 100 people from all over the world wrote directly to Bechtel CEO, Riley Bechtel, calling on him to drop his action against Bolivia. Mr. Bechtel responded to those messages with a statement from his public relations staff with documentably false and misleading statements about the price hikes his company imposed on the people of Cochabamba.
Dept. of Connections
Issue of 2003-05-05 Posted 2003-04-28
Back when Americans were still debatin whether there was just cause for a preëmptiv strike against Iraq, few arguments wer scrutinized more closely than the Bus Administration’s contention that there wer covert links between Al Qaeda and Iraq. At th C.I.A., analysts pored over aerial satellit photographs. At the Treasury Department experts sifted through financial records. At th National Security Agency, Arab-speakin linguists eavesdropped on phon conversations. But, even after Secretary o State Colin Powell put his credibility on th line, in a damning, dot-connecting speec before the United Nations last February questions persisted about the solidity of th alleged links between Saddam and Osama.
Now there is a new and demonstrable connection, but it is not the kind that the Bush Administration had in mind. In fact, it is more likely to fuel the speculations of conspiracy theorists than it is to put their fears to rest. It turns out that a money trail runs—albeit rather circuitously—from the lucrative business of rebuilding Iraq to the fortune behind Osama bin Laden. Bin Laden’s estranged family, a sprawling, extraordinarily wealthy Saudi Arabian dynasty, is a substantial investor in a private equity firm founded by the Bechtel Group of San Francisco. Bechtel is also the global construction and engineering company to which the U.S. government recently awarded the first major multimillion-dollar contract to reconstruct war-ravaged Iraq. In a closed competitive bidding process, the United States Agency for International Development chose Bechtel to rebuild the major elements of Iraq’s infrastructure, including its roads, railroads, airports, hospitals, and schools, and its water and electrical systems. In the first phase of the contract, the U.S. government will pay Bechtel nearly thirty-five million dollars, but experts say that the cost is likely to reach six hundred and eighty million during the next year and a half.
When the contract was awarded, two weeks ago, the Administration did not mention that the bin Laden family has an ongoing relationship with Bechtel. The bin Ladens have a ten-million-dollar stake in the Fremont Group, a San Francisco-based company formerly called Bechtel Investments, which was until 1986 a subsidiary of Bechtel. The Fremont Group’s Web site, which makes no mention of the bin Ladens, notes that “though now independent, Fremont enjoys a close relationship with Bechtel.” A spokeswoman for the company confirmed that Fremont’s “majority ownership is the Bechtel family.” And a list of the corporate board of directors shows substantial overlap. Five of Fremont’s eight directors are also directors of Bechtel. One Fremont director, Riley Bechtel, is the chairman and chief executive officer of the Bechtel Group, and is a member of the Bush Administration: he was appointed this year to serve on the President’s Export Council. In addition, George Shultz, the Secretary of State in the Reagan Administration, serves as a director both of Fremont and of the Bechtel Group, where he once was president and still is listed as senior counsellor.
Rick Kopf, the general counsel of the Fremont Group, which manages some eleven billion dollars in assets, confirms that the bin Laden family invested about ten million dollars in one of Fremont’s private funds before September 11, 2001. He noted that the bin Laden family has not enlarged its stake since then, but he declined to provide additional details about its association with the firm. He also chose not to discuss the origin or the nature of the relationship between the bin Laden and Bechtel families, both of which made fortunes in huge construction projects in the Arab world. The Fremont Group evidently does not go in for connecting the dots. As Kopf said, “Ownership is private and is not disclosed.”